If you are looking to buy a property in Spain it will not have escaped your attention that the Pound, Dollar, Krona and many other currencies, are getting considerably stronger against the Euro. This was underlined over the weekend with the victory of Syriza in the Greek elections, pushing the Euro down even further (although, at the time of writing it had recovered somewhat). This of course means it is a great time to buy in Spain.
In this article we are going to demonstrate what great value Spain now is for people from various countries. We are going to use the UK as an example.
For most of the 2000’s, the pound hovered around the 1.45 mark against the Euro. In 2007 this was the case, and a property costing 290000 euros would have effectively cost you 200,000 pounds sterling to buy. By 2008 the pound had dropped to the 1.30-1.35 rate but what was to come was hard hitting.
In November 2008, after the collapse of the markets and various huge financial institutions, the UK government effectively devalued the pound allowing it to fall to 1.02.29 against the euro, almost parity.
This meant that the property you had invested 200,000 pounds in would now only get you 204,580 euros, if you sold it for the same amount of pounds but of course you wouldn’t have done…
As you would have been selling in Euros, if you sold it for the 290,000 euros you had spent then you made a huge profit on transfer. Even though you had no capital gain in Spain, your 290,000 euros would get you 283.420 pounds! (not bad work if you could get it.)
However, the market had peaked and prices started to fall… and fall… and fall. Now, official statistics state that, in Valencia, prices have dropped around 47% since peak (peak was 2007). Therefore, that 290,000 euros purchase would now only be worth 153,700 euros supposing an average fall across the board. If the pound had stayed low then you would still recoup 150,215 pounds and mitigate the loss. However the pound has risen since then on the back of QE (Printing cheap money) in the UK and the continuing problems of the Eurozone.
At current rates that 153,700 euro property would only cost you 114,700 pounds. That means that for a British buyer, at average prices of Spanish property in the Valencia region, there has been an effective 58% drop in prices since 2008 when the world financial system stepped off the edge of the cliff.
But there is even better news (for buyers). There are some bargains out there like this one (See picture below), originally priced at 360000 euros, where the owner has brought the price down to a ridiculously low level in order to sell. This property is now priced at 125,000 euros, effectively 93,283 pounds sterling! In 2008 at the lowest point for the pound this property would have cost 351,837 pounds sterling.
That is an effective fall of 73.5% in asking price for a buyer who has pounds to spend.
That is all good news for buyers as more price drops are unlikely on most properties that are well situated with a reasonable asking price. Also, it is possible to fix your rate at the current high rates just in case the Euro recovers ground. Contact our currency partner here to see how.
The only question really is, when are you going to join us here where now your money goes a lot further?
- diesel now under 1 euro per litre,
- food costs up to half of the price of most other European nations,
- tourism going off the scale in popularity so buying investment properties is a serious proposition etc…)
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